2018 (9) TMI 51 - HC - Customs

Communication/ orders dated 18th October, 2016 and 2nd November, 2016 - case of petitioner is that there is a defect/ flaw in the decision making process adopted by the Commission. This in view of the fact that the Commission did not hear the Petitioners in respect of its contention that the order dated 22nd April, 2016, has been complied with and yet rejected it - Held that - The impugned order dated 18th October, 2016, informing the Petitioner that its application for settlement stands rejected in view of the order dated 22nd April, 2017 of the Commission, is without taking into account the letter dated 22nd June, 2016 addressed by the office of the Commission to the Petitioner, directing them to deposit interest immediately. Petitioner, in compliance thereof paid the interest. These were issues which required the Commission to hear the Petitioner, before holding/ communicating that there is non-compliance with the order dated 22nd April, 2016. In fact, miscellaneous application dated 25th October, 2016 to recall/reconsider the communication dated 18th October, 2018 was also rejected on 2nd November, 2016 without any hearing or taking into account the events subsequent to 22nd April, 2016, particularly, the letter dated 22nd June, 2018 of the Commission. Thus, there is undisputedly a flaw in the decision making process. The Commission is entitled to come to a view that the Petitioner has not complied with the order dated 22nd April, 2016 within the time frame provided therein and there is no justification for extension of time - the orders/ communications dated 18th October, 2016 and 2nd November, 2016 from the office of the Commission set aside - the Commission is directed to hear that Petitioner on its plea that the order dated 22nd April, 2016 passed by the Commission, has been complied with and pass appropriate order thereon, in accordance with law. Appeal allowed by way of remand.

Summary

Issues:
Challenge to communication/orders passed by the Central Excise & Service Tax Settlement Commission regarding non-payment of interest within the stipulated period for settlement application.

Analysis:
The petition challenged the communication/orders dated 18th October, 2016, and 2nd November, 2016, issued by the Central Excise & Service Tax Settlement Commission. The communication on 18th October, 2016, informed the petitioner that failure to pay interest within 30 days resulted in rejection of the settlement application. The communication on 2nd November, 2016, rejected the petitioner's request for restoration of the application. The petitioner had imported goods from China in 2009, misdeclaring the source to evade antidumping duty. Show cause notices were issued in 2013, leading to the petitioner applying for settlement with the Commission under Section 127B of the Customs Act.

During the settlement process, the Commission found the duty and interest amounts due were not satisfied, leading to a notice to the petitioner. The Commission's order on 22nd April, 2016, required the petitioner to pay the deficiency within 30 days. The petitioner paid the customs duties but disputed the interest payment, leading to further communications and payments. Despite the payments, the Commission rejected the application on 18th October, 2016, due to non-payment of interest within the stipulated period.

The petitioner argued a flaw in the decision-making process, stating compliance with the order by paying interest post-deadline. The Revenue contended the order was self-operating, and non-compliance led to rejection. The Court found the petitioner had paid the interest after a communication from the Commission, indicating compliance. The Court noted a flaw in the decision-making process, as subsequent events were not considered before rejection.

In light of the circumstances, the Court set aside the Commission's orders and directed a hearing to determine compliance with the April 2016 order. The Court clarified that the Commission would decide on the rectification application and the quantum of interest paid. The judgment emphasized the need for a fair hearing and compliance with the law in resolving the dispute.

The Court's decision highlighted the importance of due process and fair consideration of submissions before rejecting settlement applications. The judgment focused on the need for proper evaluation of compliance with orders and the requirement for a thorough hearing before making decisions on rejection or acceptance of settlement applications.